Poundstretcher could close nearly half its stores in six weeks’ time, with 2,000 jobs at risk, after landlords and other creditors approved a rescue restructure.
Rents will be cut by up to 40% on 84 stores and held at current rates on 94 stores under the insolvency process known as a company voluntary arrangement (CVA) approved late on Thursday night.
Poundstretcher has agreed to pay rent on 253 stores for six weeks but warned landlords that the outlets could close after that if new deals could not be agreed. A further 23 stores owned by a company directly linked to Poundstretcher may also close as the division is expected to be put into administration next week.
Will Wright, a restructuring partner at KPMG and joint supervisor of the CVA, said: “The approval of the CVA provides a stable platform from which the company can continue to operate across a more focused store portfolio.”
More than 90% of all voting creditors including an “overwhelming majority” of landlords approved the CVA, surpassing the 75% total required in order to pass the resolution.
Founded in 1981, Poundstretcher was one of the UK’s first discounters. It has 450 stores and employs more than 5,500 people, but faces heavy competition from the likes of B&M, Poundland and Home Bargains as well as the major supermarkets. Rival Poundworld collapsed two years ago.
Thousands of high-street jobs have been cut this week as retailers and restaurant or takeaway operators go into administration. Many had already been suffering from a tough trading environment and have struggled to cope with weeks of closure under the lockdown.
The furniture retailer Harveys, shirt maker TM Lewin and Casual Dining Group, the owner of Café Rouge and Bella Italia, all called in administrators this week while SSP, the owner of Upper Crust and hundreds of other railway station and airport eateries, as well as the Harrods and Topshop’s owner, Arcadia, all announced hundreds of job cuts.
The Scottish retail chain M&Co, fashion retailer New Look and dining groups Bistrot Pierre, Prezzo and Azzurri, the owner of Ask and Zizzi, are also under threat as they urgently seek new investment or rent cuts from landlords.